THE new UK head of Cable & Wireless will this week set out plans for hundreds more job losses as he seeks to turn the company into the Giorgio Armani of the telecoms industry.

John Pluthero, recently appointed as executive chairman of C&W UK, has warned staff that they are in for a rough ride. In a strategy memo seen by The Sunday Times, he describes the challenge at the struggling group as “one of the biggest business turnarounds attempted in British industry in the last 50 years”.

Pluthero and his management team have already identified 485 jobs that will go following the recent acquisition of Energis. “That’s just the start,” he said. “As we reduce the number of customers we serve, fix some of our problems, strip out layers of management, we will need fewer people to run the business.”

He added: “If you are worried that it all sounds very hard, it’s time for you to step off the bus. This is no longer a place for the timid.

“People are going to say it can’t be done. Many of us are going to hit the steepest learning curves of our lives. There will be times when it wll all seem impossible and times when you will feel on top of the world. If this leaves you saying, ‘Bring it on’, this is the right place for you to be.”

Pluthero, who made his name at the internet company Freeserve before running Energis, plans to concentrate C&W’s resources on its largest corporate customers, who spend £3m to £15m a year on telecoms.

He will look to shed marginally profitable operations serving small firms and other telecoms carriers. Pluthero said C&W’s aim was “selling less stuff but making better profits out of it — think Georgio Armani [sic] rather than Top Shop.”

Successive rounds of cost- cutting have led to nearly 3,000 UK staff leaving in three years. UK employee numbers, just over 5,000 after the Energis deal, will continue to fall sharply.

Pluthero’s tough-talking memo is headed: “Our business today — in bad shape.” It continues: “Congratulations, we work for an underperforming business in a crappy industry and it’s going to be hell for the next 12 months.”

This is a widely held view among analysts and commentators, a number of whom are quoted in the memo. “It’s going to be hard and it’s going to take time, but we are going to stick it to the doubters and naysayers,” says Pluthero. “We’re going to make them eat their words.”

Pluthero is known for his low opinion of telecoms managers. In his memo, he said: “The telecoms industry is historically appalling at service. This is good and bad for us — bad, because we’re part of the appalling equation today, good because it’s an area where we can beat the likes of BT.”

At C&W’s strategy update on Tuesday, analysts and investors will seek more details on the level of UK profits. Four weeks ago, the company shocked the market by revealing that its core profits were £70m below market consensus because of various one-off items.

This was an embarrassment for Richard Lapthorne, the C&W chairman, who was a well-regarded finance director in previous FTSE 100 roles. Some observers believe the profit restatement reflected Pluthero’s growing power — and that he demanded a “clean” set of figures before agreeing to take on the turnround.

C&W’s announcement this week is not expected to include the departure of Charles Herlinger, the chief financial officer who is thought to be a casualty of the profits restatement. Nor will it focus on Bulldog Communications, its heavily loss-making broadband firm.

Lapthorne began an attempted turnround of C&W in January 2003, and recruited Francesco Caio as chief executive to help him. Although Lapthorne and Caio quickly disposed of heavily loss-making operations in America, the British business has remained weak, hampered by the severe price deflation that has damaged the whole telecoms industry.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts